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Hong Kong will approve tax breaks for fund managers ‘soon’ to boost economy: KPMG

The bill, expected to pass this year, will exempt private equity, venture capital and other fund managers from paying tax on performance-linked income

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The Hong Kong government is expected to pass a bill offering tax breaks to hedge funds which will potentially attract investment and new talent to the global city. Photo: Jelly Tse
Themis Qi
Hong Kong’s determination to boost its role as a global wealth management hub has raised market expectations that the city will approve a bill offering tax relief to fund managers this year.

Speaking at a media briefing on Tuesday, Sandy Fung, KPMG China’s partner of tax and alternative investments, said the bill would be passed “soon” by the Legislative Council (Legco), the city’s lawmaking body.

“The bill could attract lots of fund managers and related talent to settle in Hong Kong, further cementing the city’s status as a global asset management centre,” Fung said.

If passed, the bill would exempt firms such as private equity and venture capital funds from paying tax on performance-linked income and salary tax on fund managers’ performance-linked bonuses starting from April 2025, as long as they meet certain requirements.

The draft law, titled the Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026, was gazetted in mid-June and was moved on June 24 to the second reading in the Legco.

It would make Hong Kong the first global city to offer accurate and detailed rules for tax break on carried interests and performance-linked income to funds and their managers, which KPMG’s Fung described as “an unprecedented and revolutionary improvement”.

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